Workers’ comp sees reform; law goes into effect in July 2014

KINGSPORT — Jeff Francis looked over a packed Eastman Board Room inside the Kingsport Area Chamber of Commerce and uttered what he called the “scariest words” employers will ever hear.

He borrowed an often repeated quote from the late President Ronald Reagan: “I’m from the government and I’m here to help.”

Francis is an assistant administrator in the Workers’ Compensation Division of the Tennessee Department of Labor and Workforce Development (TDLWD), who recently addressed about 50 human resource managers and health-care providers.

They had gathered to discuss the nuances of Tennessee’s recently passed workers’ compensation reform measure set to go into effect on July 1, 2014.

The Tennessee Chamber of Commerce and Industry, which has held a series of informational meetings across the state, touts the measure as legislation topping all other workers’ comp reform efforts with a promise to lower administrative costs and make the state more competitive in economic development efforts.

“Employers are clamoring for predictability in the system,” said Rocky McElhaney, TAJ vice president, of workers’ comp reform. “The only thing that can be predicted for sure is that every injured worker in Tennessee is going to get less, between 25 and 42 percent less payments, if they return to work and 65 to 75 percent less, if they don’t.”

The most important reform is workers’ comp claims will move from state chancery and circuit courts to a Workers’ Compensation Court within TDLWD.

An administrator of this new entity will be appointed directly by the governor, and there will be two levels of judges: One to initially rule on disputed cases and a second level to hear appeals from the initial decisions. Appeals from this second level will go to the Tennessee Supreme Court.

Employers with five or more full- or part-time workers must purchase workers’ comp insurance coverage. In the construction or mining industries, however, employers must provide coverage even if there is only one employee. What the employer pays for that insurance depends on each employee’s classification, how long the employer has been in business, the type of business the employer is in, and the employer’s total workforce, according to TDLWD.

The current workers’ comp system saw more than 100,000 medical and lost-time claims in the 2011-12 fiscal year.

While employers dealt with lost productivity, employees in those claims faced job and financial loss, and physical impairments.

“There are a lot of difficult claims to manage,” Francis said. “We had 19 people who went to work [during that year] and did not come home [due to death].”

Every year in America, nearly 4 million people suffer a workplace injury, with some never recovering, according to the Tennessee Occupational Safety and Health Administration (TOSHA). The leading causes of occupational injuries, says TOSHA, include sprains, cuts and lacerations, bruises and fractures. A sprain could cost a business more than $60,000 in direct and indirect costs, TOSHA projects.

Tennessee, Francis noted, is surrounded by eight Southeast states that have cheaper workers’ comp coverage rates.

Nationally, TDLWD says only Tennessee and Alabama use trial courts to resolve workers’ comp claims. That situation, the department insists, has led to a “litigious system,” plus inconsistency and poor timeliness in court rulings.

“The [Tennessee] Supreme Court has heard some workers’ comp cases that are 12, 13 years old,” Francis said. “The employer didn’t win, they just outlasted [the case]. ... The pressure is on us now to make sure this new program works.”

One notable reform measure is a key change in how a workplace injury is defined. Currently, there is a “could have been” standard, considering whether or not an injury happened in the workplace. Under the new law, an injured employee would be compensated if the injury arose “primarily in the course and scope of work,” when all other possible causes are considered.

A number of people in the audience raised their hands when asked if they weren’t sure a worker had a true workplace injury, but the worker got benefits anyway. The new law also provides for the worker’s treating physician to state with a “reasonable degree of medical certainty” that work caused an injury. This kind of language, TDLWD points out, will replace interpretations that the law must be “liberally construed” in favor of the employee.

The reconfigured workers’ comp system also will include an ombudsman program, employer panels to control claims and mediation that will function similarly to the current benefit review process.

The new Workers’ Compensation Court, Francis said, takes over if mediation fails.

“Seventy percent of our mediations result in a settlement,” Francis said.

Francis concluded the session by telling the audience that if all parties don’t play by the new rules, the reform measure won’t have any value.